Sensex Falls; Vedanta, Cairn in $8.5 B Deal

Chandrasekhar Atreya
16 Aug, 2010
New York City

Stocks in Mumbai traded lower on mixed earnings and weak global markets sentiment. Wholesale inflation declined to a six month low in July after food price inflation fell. Vedanta agrees to buy as much as 60% stake in Cairn India. SKS Microfinance surges 18% on first day in trading.

[R]5:00 PM Mumbai – Stocks in Mumbai traded lower on mixed earnings and weak global markets sentiment. Wholesale inflation declined to a six month low in July after food price inflation fell. Vedanta agrees to buy as much as 60% stake in Cairn India. SKS Microfinance surges 18% on first day in trading.[/R]

Indian stocks fluctuated but declined in the last session to close lower on mixed results led by drop in Reliance Communications Ltd and Suzlon Energy Ltd.

The Sensex Index declined 0.64% or 116.25 to close at 18,050.78. The CNX Nifty Index on the National Stock Exchange dropped 0.6% to 5,417.40.

Inflation in India cooled to a six-month low in July, providing the central bank some breathing space after four interest rate increases in five months. The benchmark wholesale price index rose 9.7% from a year earlier, after it gained 10.55% in June, the Commerce Ministry said in a statement in New Delhi today.

This was mainly helped by the food inflation rate falling more than half to 11.4% since November as the country received more rainfall than forecast. Rains in July, the wettest month of the monsoon season, were 102.5% of the 50-year average of 292.4 millimeters, according to the India Meteorological Department.

Annual rate of inflation measured in wholesale price index increased to 9.97% in July compared to 4.60% for a year ago. The index increased 1.9% to 307.7 from 302.1 in June.

Vedanta Resources Plc, copper miner agreed to buy as much as 60% of Cairn India Ltd for as much as $9.6 billion to gain access to oil fields.

London-based Vedanta will pay a total of about $8.5 billion to $9.6 billion in cash for the stake, the company said in a statement today. Cairn Energy Plc, the parent company of Cairn India Ltd said it will return a part of the cash to shareholders and invest the rest in exploration elsewhere.

Cairn India made an oil and gas discovery in an on-land KG Basin block. It made the discovery in the second well drilled in the block KG-ONN-2003/1 in Krishna Godavari basin.

SKS Microfinance Ltd rose as much as 18% in its trading debut in Mumbai on the first day. SKS Shares which opened at Rs 1,085 traded 13% higher at Rs 1,111.3.

The government of India approved ethanol price at Rs 27 per liter for oil companies from the current Rs 21.50 per liter and required 5% ethanol blending in petrol mandatory.

Reliance Communications stabilizes operating profit margin in the fiscal first quarter. The communications firm announced its results for the first quarter ended June 30 with net profit at Rs 251 crore, a drop of 79.42% from a year earlier on higher foreign exchange charges. Revenues declined 1.53% to Rs 5,015 crore from Rs 5,092.8 crore.

Earnings before interest, depreciation, tax and amortization improved to 32.54% of sales from 31.46% in the quarter a year ago.

Tata Motors said today its global vehicle sales in July rose 36% from a year earlier to 90,646 units. Jaguar and Land Rover sales rose 30% to 19,386 units it said in a statement today.

BEML would be supplying six cars to Delhi Metro well before the start of the Commonwealth Games in early October.

“These cars are a part of requirement placed by the Delhi Metro Rail Authorities with BEML and orders worth Rs 1,000 crore are with the company to supply cars,” said Chairman and Managing Director V.R.S. Natarajan while talking to reporters in Nagpur today.

Gainers & Losers

ABG Shipyard Limited fell 2.8% to Rs 244.75 after the shipbuilding company reported first quarter net profit fell 19.8% to Rs 38.41 crore.

Ackruti City Limited gained 0.4% to Rs 535.95 after the real estate developer said consolidated net profit for first quarter rose 319.7% to Rs 42.05 crore.

Cairn India Limited decreased 6.3% to Rs 332.85 on profit taking after Vedanta Resources said it will buy 51% to 60% in the company at a price between $8.5 and 9.6 billion in cash.

DCM Shriram Industries Limited declined 7.2% to Rs 79.15 after the industrial conglomerate maker said first quarter net loss was Rs 14.26 crore compared to net profit of Rs 20.18 crore in same quarter of year ago.

Glenmark Pharmaceuticals Limited rose 0.4% to Rs 268.05 after the pharmaceutical company said its subsidiary received U.S. approval to market Trospium tablets in 20 milligram strength.

House of Pearl Fashions Limited rose 0.9% to Rs 76.60 after the ready-to-wear apparel maker said board approved merger of a subsidiary -- Pearl Global, with the company.

McNally Bharat Engineering Co. Limited fell 4% to Rs 285.20 after the power, steel, aluminum, material handling solution provider said first quarter net profit dropped 23.8% to Rs 6.15 crore.

Power Grid Corporation of India Limited rose 3.3% to Rs 105.30 after the power transmission company reported the company is likely to enter into telecom tower business.

Reliance Communications Limited declined 2.7% to Rs 163.50 after the telecommunications company reported first quarter consolidated net profit plunged 84.7% to Rs 250.89 crore.

Raymond Limited surged 5.6% to Rs 396.20 after the multi-product conglomerate company said HDFC Mutual Fund acquired additional 2.44% stake in the company on August 13.

Suzlon Energy Limited plunged 7.2% to Rs 52.35 after the wind power company reported a first quarter consolidated net loss of Rs 912.22 crore compared to net loss of Rs 452.67 crore in the quarter a year ago.

Sundaram-Clayton Limited surged 5.4% to Rs 185.00 after the non ferrous gravity and pressure die castings company reported a first quarter net profit of Rs 2.33 crore compared to net loss of Rs 2.09 crore in same quarter of year ago.

Shree Cement Limited fell 4.1% to Rs 1,805.35 after the cement manufacturing company reported first quarter net profit plunged 63.6% to Rs 105.94 crore.

Sadbhav Engineering Limited increased 1.7% to Rs 1,502.95 after the infrastructure development company said its joint venture won road construction project for Rs 229.91 crore from the state government of Jharkhand.

Tata Power Company Limited fell 0.9% to Rs 1,315.85 after the integrated private power utility company stock traded ex-dividend of Rs 12 per share for the year ended March.

Wockhardt Limited soared 18% to Rs 190.10 after the pharmaceutical company said board approved a preferential issue of up to 40 crore convertible or non-convertible preference shares of Rs 5 each.